Fort Walton Beach — Fiscal Year 2020-21 Adopted_Budget — reading text

actuarially determined contribution levels except for the General Pension Plan which has switched from a percentage to a fixed dollar amount. The actuary determines City contribution requirements using estimated future earnings of members of the plan, as well as other assumptions on investment returns, retirement age, and, among others, expected mortality. Minimum benefits for both the Police and Fire Defined Benefit Plans are mandated by Florida State Statutes 175 and 185. The Police and Fire Plans both meet or exceed these minimum benefit levels. The City’s contribution to the General Employees defined benefit plan is budgeted at $1.02M, which is a decrease of $395K over the prior year. This plan was closed to new entrants in January 2010. The City’s contribution to the Police Officers plan is budgeted at $1.03M and the contribution to the Firefighters plan is budgeted at $1.39M, which is a combined increase of $412K. Insurance Increases In 2010, the Federal Government passed the Patient Protection and Affordable Care Act. The Act, which mandates, among other things, that employers offer specific medical insurance for any employee working more than thirty (30) hours per week, has had a negative impact on the cost of providing such insurance. This year, the insurance premium rate increased 10.5%, which resulted in a total insurance budget of $3.1M citywide, which is an increase of $400K from the previous year. The City contributes 100% of the premium for employee coverage in its Standard Insurance Plan and 75% of the employee coverage for those who elect the Premium Insurance Plan. For employees hired before October 1, 2008, the City contributes 75% of all dependent coverage. Employees hired after this date receive a 50% contribution from the City for all dependent coverage. City of Fort Walton Beach, FL 7 City Manager’s Budget Message Fleet Replacement The City’s Fleet Replacement Program (FRP) is a planning and budgeting tool that identifies the replacement of vehicles with a value greater than $10,000 and a useful life of eight years or more. The replacement criteria provides a mechanism for the systematic evaluation of vehicle utilization and repair/maintenance costs and serves as a guide for efficient and effective replacement. Generally speaking, police patrol vehicles are replaced on an 8-year cycle and the remainder of the fleet on a 10-12 year cycle. Each year as part of the budget process, the fleet is evaluated based on established replacement criteria and a ten-year schedule of replacements is developed depending on a projection of available fiscal resources and the evaluation scoring. Vehicle replacements are funded objectively based on established criteria and funding resources. To maximize the useful life of vehicles and meet service delivery levels, vehicles may be transferred between departments prior to disposal. Prior to replacing a vehicle, an analysis is performed to determine if a less expensive mechanism would meet employee needs at a reduced operating expense to the City or if the vehicle should be removed from the fleet without replacement. According to the economic theory of vehicle replacement, over time vehicle capital costs decline while vehicle operating costs increase. Ideally, vehicles should be replaced around the time that annual operating costs begin to outweigh annual capital costs. Since 2014, the City, working under a future sustainability plan, has funded replacements based on the FRP. Vehicles totaling $565K are scheduled for replacement in FY 2020-21. Detailed information on vehicle replacement can be found in the Fleet Replacement Schedule (reference Table of Contents). OTHER ASSUMPTIONS & CHANGES REVENUES (reference Table of Contents for detail location) 1. Revenues are estimated at conservative levels to guard against unanticipated economic shifts, legislative changes, or collection levels. General government revenues are largely budgeted based on historical collection and growth levels. Ad Valorem and State shared revenues are budgeted based on external estimates received from their respective authorities. Enterprise revenues are based on historical usage and/or number of customers. A new five-year utility rate study, which includes water & sewer, sanitation and stormwater, has been completed. The study determines the required rates to generate sufficient revenue to sustain renewal and replacement reserves and account for debt service requirements and will be updated on an annual basis to account for real-time revenues, expenses, and changes within the enterprise systems. FY 2020-21 will include Year 1 of the new five-year rate study, which was adopted by City Council on August 11, 2020. The Fire Services Assessment was implemented in January 2020 on the City’s utility bill. For FY 2020-21, the Fire Services Assessment will now be included on the property tax bill and collected through the Uniform Collection Methodology. Information about the FY 2020-21 Fire Services Assessment was included on the TRIM Notice mailed out to property owners in August 2020. City of Fort Walton Beach, FL 8 City Manager’s Budget Message The State of Florida’s revenue projections for FY 2020-21 are significantly lower than FY 2019- 20 and are a result of the uncertainty of the COVID-19 Pandemic. 2. Use of Reserves – Appropriations from fund balance (governmental funds) or net assets (enterprise funds) are budgeted as follows: a. General Fund - $1.006M from unassigned Fund Balance. b. Law Enforcement Trust Fund - $9K from fund balance for forfeiture and equipment related expenses. c. CRA Fund - $1.263M from unassigned Fund Balance. d. Sanitation Fund - $378K from unassigned Fund Balance. EXPENSES (reference Table of Contents for detail location) 1. Wages have been adjusted as previously discussed. 2. Benefits have been adjusted as follows: a. Medical insurance – health insurance premiumsincreased by 10.5% based on actual rate changes. b. Employee defined benefit pension – as previously discussed, for a total impact of $3.44M. 3. Computer replacements are budgeted at a total cost of $74K; reference the Table of Contents for deatil location of the FY 2020-21 IT replacement schedule, which details each replacement. 4. The following vehicle and equipment replacements and building improvements are budgeted at a total cost of $1.4M. Reference the Table of Contents for the FY 2020-21 vehicle replacement schedule location. a. General Fund – 3 police patrol cars; 6 trucks/SUVs; library books; 1 ATV for Fire transport, 36 ballistic vests; resurfacing of Mooney Road tennis courts, playground equipment, leveling tee boxes. b. Community Redevelopment Agency Fund – Museum entrance improvements. c. Utilities Fund – Upgrade the well monitoring system. d. Sanitation Fund – 1 frontloader. 5. The following capital improvement projects (CIPs) are budgeted at a total cost of $1.5M. Please reference the Table of Contenents for location of more detailed information for CIPs. a. General Fund – street resurfacing, pedestrian and intersection improvements, Hollywood Boulevard reconfiguration, IT enterprise assessment. b. Community Redevelopment Agency Fund – District branding, Landing improvements. c. Utilities Fund – sewer line rehabilitation, water meter replacements, water line replacement. d. Cemetery Perpetual Care – Add plots to Hope Section, new Cemetery Building design. 6. Certain capital improvement projects, grants, and/or purchases that were authorized, budgeted, and appropriated by City Council in a prior fiscal year but are incomplete as of September 30th are carried forward into the new fiscal year. These special projects and purchase order City of Fort Walton Beach, FL 9 City Manager’s Budget Message encumbrances are identified in the budget resolution at the end of the document. ACKNOWLEDGEMENTS Preparation of this budget would not have been possible without the resiliency and dedication of the Finance Department Staff, including Julio Lacayo, Jr., Finance Director, and Carol Godwin, Budget & Grants Analyst. I would like to express my appreciation to all Department Directors and staff who assisted and contributed to the preparation of this budget. I would also like to thank the Mayor and City Council for their commitment to conducting the financial operations of the City of Fort Walton Beach in a responsible and progressive manner. Sincerely, Michael D. Beedie City Manager City of Fort Walton Beach, FL 10 City Manager’s Budget Message City of Fort Walton Beach, FL 11 Budget Overview The fundamental purpose of the City’s budget is to link what City Council wants to accomplish for the community with the resources necessary to do so. As such, the budget offers more than just financial elements – it presents an overview of the City's overall operations. This document is intended to provide City Council and our citizens with a plan addressing financial, operational, and policy issues. The budget serves as a: Policy Document – The budget presents financial policies, addresses Strategic Plan The City’s Business is SERVICE goals, and identifies the short and long-term We are committed to providing quality service to impact programs, services, and capital our community in ways that are responsive and improvements will have on the City’s caring by working together to serve our residents. operations and finances. We believe that the success of our organization depends upon the teamwork, mutual trust, and honesty Financial Plan – The budget outlines the achieved through our commitment to the following financial structure and operational changes Core Values: required for financial stability, including the  Integrity: we will conduct ourselves in an honest, capital improvements program and debt trustworthy, and ethical manner. management information.  Accountability: we will take full responsibility for our actions, resources, and attitudes. Operations Guide – The budget provides direction to departments by identifying the  Teamwork: we will work together to provide quality services. relationships between organizational units and  Customer Service: we will be professional, use programs, identifying the workforce and all available resources, and strive to meet the needs historical data on operations, identifying the of our customers. impact of capital spending, and establishing  Continual Improvement: we will promote a measurable performance goals and objectives culture that seeks